Finance minister says this one-time tax imposed to reduce budget deficit | No more subsidies, petroleum levy to go up to Rs50 | Taxable income level for salaried class announced in budget withdrawn
ISLAMABAD - Minister for Finance Miftah Ismail on Friday informed the National Assembly that the coalition government has decided to impose 10 per cent ‘super tax’ on the affluent class to reduce the budget deficit.
“The purpose of imposition of ‘super tax’ is to reduce the budget deficit in order to end reliance on foreign assistance,” said the Finance Minister while winding up the debate on budgetary proposals.
About the Imran Khan-led government’s economic policies, the Finance Minister commented that the country was near to default but now it was on the path to progress.
Giving details of the super tax, the minister explained that individuals and companies earning Rs 150 million annually will have to pay one percent additional tax, two percent additional tax on Rs 200 million income, three percent on Rs250 million income and four percent additional tax on Rs 300 million income. “This next tax will be valid only for this term (one year),” he announced.
About the budgetary proposals by the opposition, Miftah said most of the recommendations suggested by parliamentarians in their speeches would be incorporated into the budget. Clarifying the taxes announced by Prime Minister Shehbaz Sharif, he said that no indirect taxes had been imposed and neither had any tax been imposed on consumption. “This government has taxed the rich segment of the society,” he said announcing that tax would be imposed over the companies owned by the sons of PM Shehbaz.
About his own company, the Minister said his companies will also pay Rs200 million more in taxes. “If we are asking others to pay more taxes we also contribute in this cause,” the finance minister said. He also said the government had committed to the IMF that the primary deficit of Rs1,600 billion recorded this year would not only be brought down but also there would be a surplus of Rs153 billion.
“An additional tax of 1pc would be imposed on individuals and entities whose annual income exceeded Rs150 million on account of poverty alleviation,” he said mentioning that those with an annual income of over Rs200 million would be subject to an additional tax of two percent.
He said those earning more than Rs250 million to three percent and those having an annual income of more than Rs300 million would be taxed four percent of their income. “This will be onetime tax for the fiscal year 2022,” he said mentioning that this government has identified 13 sectors that had earned significant profits this year.
He said they have decided that companies that have an income of more than Rs300 million will be subject to a super tax of ten percent for a year.
The minister said the companies working in cement, steel, sugar, oil and gas, fertiliser, LNG terminals, textile, banking, automobile assembling, cigarettes, beverages, chemicals and airline sectors would have to pay this tax.
He said the entities in the rest of the sectors would have to pay this one-time additional tax amounting to four percent of their income. The Minister said that there were around 9 million retail shops in the country and this government wanted to bring 2.5 to 3 million of these shops into the tax net.
“A new scheme had been introduced under which the income tax and sales tax that these shops have to pay have been fixed with their electricity bills,” he said adding under this initiative, small shops would have to pay a fixed tax of Rs3,000 monthly and big retailers Rs10,000. He said retailers who were dealing in gold and had shops of 300 square feet or less would have to pay a fixed income and sales tax of Rs40,000. And for bigger shops, the sales tax had been reduced from 17pc to 3pc, he added. He said that a similar scheme of fixed tax would be announced for realtors, builders and car dealers.
“This tax is on their income and not expenses, and this is why it will not increase inflation but increase our revenue,” he said. About the oil marketing companies, the finance minister said these entities had to pay a minimum tax of 0.75pc, which had been reduced to 0.5pc. He said, 5pc commission was cut on outgoing indenters at the time of receipt. “This has now been reduced to 1pc.”
He said Overseas Pakistan who had a NICOP would be considered included in the list of active taxpayers. Whereas, they would not be charged any additional taxes while buying a property. The Minister said families of martyrs and war-wounded individuals would be exempted from tax on income from plots, Ismail said and added that sales tax on skin and hides and surgical instruments had also been removed.
He also said that the tax target, which was initially set at Rs7.004 trillion had been increased to RS7.47 trillion. At the same time, he added, the target of non-tax revenue that was set at Rs2 trillion had been revised down to Rs1.94 trillion. He said the government intended to introduce a bill for exempting the residents of these areas from paying income tax. Companies and industries operating in these areas would be brought into the tax net, he said. The minister said as a result of this “farmer-friendly” budget the country would become self-reliant in the production of edible oil.